Synonyms

Translations

See also

Layoff is the temporary suspension or permanent
termination
of employment of an employee or (more commonly) a
group of employees for business reasons, such as the
decision that certain positions are no longer necessary or a
business slow-down or interruption in work. Originally the term
"layoff" referred exclusively to a temporary interruption in work,
as when factory work cyclically falls off. However, the term has
also applied to the permanent elimination of positions as a
cost-cutting measure (or for other reasons).

Further euphemisms are often used to
"soften the blow" in the process of firing and being fired,
including downsize, rightsize, smartsize, workforce reduction or
workforce optimization, simplification and reduction in force (also
called a "RIF", especially in the government employment sector).
Mass layoff implies laying off a large number of workers. Attrition
implies that positions will be eliminated as workers quit or
retire. Early retirement means workers may quit now yet still
remain eligible for their retirement benefits later. While
redundancy is a specific legal term in UK employment law, it may be
perceived as obfuscation. Firings imply
misconduct or failure while lay-offs imply economic forces beyond
ones control.

Reasoning

A lay-off is typically driven by one of two
forces. In the first case, the goal is to decrease a company's
labor cost. Typically the reasoning is that the company will be
able to generate the same gross revenues in the future with a
smaller number of workers: if the company's revenues do indeed stay
constant while labor costs go down, then profit will increase.
Additionally, some layoffs occur when management believes that
revenue is forecast to go down: by reducing labor costs, companies
can maintain profitability despite reduced sales. Enterprises with
seasonal sales (ski resorts) and or production (temperate forest
logging) deal with lay-offs as a matter of normal business
operations.

In the second case, downsizing is driven by
macroeconomic
forces. A company determines that its workers can no longer
profitably produce products at current market prices. A company
will only employ workers when the per-hour value of their output
(marginal
productivity of labor) exceeds the cost to employ those
workers.

Reduction by country

United Kingdom

It's important to distinguish the term
"layoff" from redundancy in terms of UK employment law. The normal
lay person's understanding of the term "layoff" is that one has
been made redundant, i.e. that one has been dismissed. This isn't
technically correct. Being "laid off" just means being sent home
without pay or work. This doesn't mean one has been dismissed.
Being laid off doesn't preclude a return to work when business
picks up under exactly the same terms and conditions as
before.

Many employers reserve the contractual right to
send employees home for short periods without pay when work is
scarce. (Although it is rarely used outside the manufacturing
sector.) If this right is indeed reserved in the contract of
employment, then the employees aren't entitled to immediately seek
compensation in the Employment Tribunal.

However, if an employee is laid off for 4
continuous weeks, or for 6 weeks within any 13 week period, he is
entitled to give his employer notice and claim a redundancy payment
in the employment tribunal.

However, when most lay people in the UK talk
about being "laid off" they actually mean that they have been made
redundant. In UK employmentlaw, redundancy is the dismissal of
an employee when his or
her job becomes unnecessary. UK
redundancy law allows three reasons for redundancy:

Total cessation of the employer's business (whether permanently
or temporarily);

Cessation of business at the employee's workplace;

Reduction in the number of workers required to do a particular
job.

The law requires the employer to make a statutory
redundancy payment, which is tax-free and is based on the
employee's length of service, as long as the employee has served a
minimum of two years. The employee isn't allowed to claim
redundancy if he or she was offered an alternative position with
similar salary, status and responsibilities.

United States

Throughout the last quarter of the 20th
century, the manufacturing sector has
seen massive downsizing due to increased per-worker productivity,
technology advances that have rendered human labor obsolete, the
availability of lower-cost labor overseas and the lack of
government action to protect US jobs and industry.

U.S. manufacturing companies have also
increasingly shifted production overseas, closing down factories in
the U.S. and establishing factories and assembly plants in Latin
America, the People's Republic of China, Vietnam, etc., or using
manufacturing sub-contractors owning such facilities. U.S.
manufacturing and service companies have also opened call centers
in India or sub-contracted with companies owning such
facilities.

Reduction in force common abbreviations

RIF - A generic reduction in force, of undetermined method.

IRIF - An Involuntary Reduction in Force - The employee(s)
didn't voluntarily choose to leave the company. This usually
implies that the method of reduction involved either layoffs,
firings, or both, but wouldn't usually imply resignations or
retirements. If the employee is fired rather than laid off, the
term "with cause" may be appended to indicate that the separation
was due to this employee's performance and/or behavior, rather than
being financially motivated.

VRIF - A Voluntary Reduction in Force - The employee(s) did
play a role in choosing to leave the company, most likely through
resignation or retirement. In some instances, a company may exert
pressure on an employee to make this choice, perhaps by implying
that a layoff or termination would otherwise be imminent, or by
offering an attractive severance or early retirement package.

eRIF – Layoff notice by email.

WFR - Work Force Reduction

Unemployment compensation

The method of separation may have
an effect on a former employee's ability to collect whatever form
of unemployment compensation might be available in their jurisdiction. In many U.S.
states, workers who are laid off can file an unemployment claim and
receive compensation. Depending on local or state laws, workers who
leave voluntarily are generally ineligible to collect unemployment
benefits, as are those who are fired for gross misconduct. Also,
lay-offs due to a firm's moving production oversees may entitle one
to increased re-training benefits.

Certain countries (eg. France), distinguish
between leaving the company of one's free will, in which case the
person isn't entitled to unemployment benefits and leaving the
company voluntarily in the frame of a RIF, in which case the person
is entitled to them. A RIF suppresses jobs, rather than specific
people, and is usually accompanied by internal redeployments. A
person might leave even if their job isn't suppressed, unless the
employer has strong objections. In this situation, it's more
interesting for the state to facilitate the departure of the more
professionally active people, since they are less likely to remain
jobless. Often they found new jobs while still being paid by the
old companies, costing nothing to the social security system in the
end.

Derivative terms

Downsizing has come to mean much more than
job losses, being the word downsize now applied to almost
everything. People describe downsizing in their cars, houses and
nearly anything else that can be measured or valued.

This has also spawned the opposite term upsize,
which means to grow, expand or purchase something larger.